- Draghi Draws Line Under ECB Rate Debate and Warns on Prices. (video) Mario Draghi sought to quash the idea that the European Central Bank will begin tightening policy sooner than planned, saying that inflation in the euro area isn’t strong enough for officials to start signaling such a shift. “I do not see cause to deviate from the indications we have been consistently providing in the introductory statement to our press conferences,” the ECB President said in a speech in Frankfurt on Thursday. “We have not yet seen sufficient evidence to materially alter our assessment of the inflation outlook -- which remains conditional on a very substantial degree of monetary accommodation.”
- Mobius Says China Stocks Are Too Expensive After Tech-Led Surge. Mark Mobius is tempering his bullishness toward China’s equity market. The legendary emerging-market investor says Chinese shares traded offshore have become too pricey after an almost 20 percent jump in technology stocks helped propel the MSCI China Index to its most expensive level in more than six years.
- China's Local Debt Nightmare Is Getting a Rerun After Rating Cut. The first ever downgrade of a Chinese local-government financing vehicle by an international ratings agency is reigniting concern over the debt-saddled entities, amid angst there could be more cuts to come. S&P Global Ratings reduced its credit rating on Jiangsu NewHeadline Development Group, a construction services provider and one of the largest financing firms owned by Lianyungang City -- in China’s eastern Jiangsu province -- by one notch to BB Thursday. S&P attributed the cut to the local government’s high debt burden and said the LGFV’s credit profile will remain under pressure for the next two years.
- European Stocks Advance as Energy Rally Outweighs Fed Concern. (video) European stocks rose as a rally in oil companies offset concern over minutes from the last Federal Reserve meeting that showed policy makers may shrink the U.S. central bank’s balance sheet this year. The Stoxx Europe 600 Index rose 0.2 percent at the close, after losing as much as 0.8 percent earlier in the day. Real estate companies closed at the highest level since October, while energy shares tracked an advance in oil. Lenders gained 0.3 percent, after reversing a drop of as much as 1.3 percent, as concern eased that a balance-sheet reduction could damp the need for the Fed to raise interest rates.
- Congressional Clock Running Out on Repealing Obama's Late Rule. (video) Hunting bears by airplane is legal again in Alaska and the mentally-ill can purchase guns thanks to Republicans’ successful use of a once-obscure law allowing them to quickly roll back regulations. But with a key deadline for using what’s known as the Congressional Review Act looming, plenty of other rules targeted for elimination are likely to be spared -- or fall into the longer, laborious process of review by the administration.
- Fed's Williams Sees Balance-Sheet Shrinking Taking Five Years. (video) Federal Reserve Bank of San Francisco President John Williams said it may take the U.S. central bank around five years to shrink its balance sheet to a more normal size once that process gets underway. Speaking with reporters Thursday in Frankfurt, Williams said it made sense to begin the roll-off toward the end of 2017. The length of time it takes would depend on how far officials want to trim a balance sheet swollen to $4.5 trillion by three rounds of asset purchases designed to protect the U.S. economy from the financial crisis.
Wall Street Journal:
- Not a Dot-Com Bubble, not 2007, but a Nasty Mix of Both. There is so much more debt than usual being piled up by companies outside the finance sector.